Oil field, Alberta, Canada
Norms Pitts Bloomberg Gety pictures
Oil prices may decrease in the longer term after the next initial jump President Donald Trump's implementation of huge definitions In Canada, Mexico and China, industry monitors said.
During the weekend, Trump continued through his 25 % threatening definition on imports from Canada and Mexico, as well as a 10 % duty on goods from China. Canada's energy resources will be subject to 10 % less tariff.
US West Texas Medium It increased by 1.75 % to $ 73.8 a barrel, while American gasoline futures rose. RBob The future gasoline contracts were 2.81 % At $ 2.11 per gallon. Brent international crude 0.71 % rose to $ 76.21 a barrel.
According to The latest data from the US Energy Information ManagementAmerica's imports of Canadian crude oil reached 4.3 million barrels per day in July 2024, after expanding the Trans Mountain pipeline in Canada. Canada constitutes about 62 % of all crude oil imports in the United States In the first ten months of last year, Mexico represented about 7 % in the same period.
CNBC oil observers told CNBC that raw markets will witness higher prices and consumers will outperform the costs of gasoline and diesel in the short term, but only the rise is temporary.
“While the initial step on crude oil is rising, a cycle of definitions and revenge procedures by Canada, Mexico and China and perhaps others in the future can lead to recession all over the world, causing low oil prices,” Andy Lebo, President of Lipow and said CNBC oil partners.
Lipow added that the customs tariff did not lead to the removal of any oil supplies from the market, and will lead to the redistribution of supplies as Mexico and Canada are looking to convert its volumes to Europe and Asia. Meanwhile, US refineries will look forward to treating more local crude oil while searching for the Middle East alternatives.
Canada to bear the greatest burden
Saul Cavon, head of Energy Research at MST Marquee, said that both Canada and Mexico have limited backup refining or alternative export methods, and the customs tariffs are likely to drive oil producers in both countries to highly prices discounts.
Goldman Sachs wrote in a note dated on Sunday, Canadian oil producers will eventually bear the burden of definitions with a 3 to 4 discount for a barrel on Canadian crude given the alternative export markets, Goldman Sachs wrote in a note dated Sunday.
In the medium term, Goldman analysts also expect that the wide customs tariff will affect global GDP as well as demand for oil, which worries oil prices.
In addition, global oil prices can decrease further after the next quarter, as the definitions increase the image of demand and face OPEC+ increasing pressure from Trump to reverse production discounts, Cavon said. Trump recently stated that he is urging The Kingdom of Saudi Arabia and OPEC to reduce oil prices.
The Oil Cartel, which is scheduled to meet on Monday, did not respond after Trump's request. OPEC+ blocked 2.2 million barrels per day from the global market to the low prices STEM. In December, the group decided to extend its production discounts at least during March 2025 before gradual disposal of it throughout the year.
